If you've ever applied for a loan in India, you've heard the term EMI — but how is it actually calculated? This guide breaks down the EMI formula step by step, with real examples for home loans, car loans and personal loans.
EMI (Equated Monthly Instalment) is the fixed monthly payment you make to repay a loan. Unlike a simple interest payment, each EMI includes both:
The ratio between principal and interest changes every month. In the early months, most of your EMI goes toward interest. As the loan matures, more goes toward principal — this is called amortization.
Where:
Loan: ₹30,00,000 at 8.5% p.a. for 20 years
EMI = 30,00,000 × 0.007083 × (1.007083)²⁴⁰ ÷ ((1.007083)²⁴⁰ − 1)
= 30,00,000 × 0.007083 × 5.281 ÷ (5.281 − 1)
= 30,00,000 × 0.007083 × 1.233
= ₹26,035 per month
| Loan Amount | Rate | 10 Years | 20 Years | 30 Years |
|---|---|---|---|---|
| ₹20 Lakh | 8.5% | ₹24,797 | ₹17,357 | ₹15,368 |
| ₹30 Lakh | 8.5% | ₹37,196 | ₹26,035 | ₹23,052 |
| ₹50 Lakh | 8.5% | ₹61,993 | ₹43,391 | ₹38,420 |
| ₹75 Lakh | 8.75% | ₹93,998 | ₹66,484 | ₹59,039 |
| ₹1 Crore | 9.0% | ₹1,26,676 | ₹89,973 | ₹80,462 |
For the ₹30L example above, here's the split of your first and last EMI:
| Month | EMI | Interest | Principal | Balance |
|---|---|---|---|---|
| Month 1 | ₹26,035 | ₹21,250 | ₹4,785 | ₹29,95,215 |
| Month 120 (10 yr) | ₹26,035 | ₹14,210 | ₹11,825 | ₹19,86,000 |
| Month 240 (20 yr) | ₹26,035 | ₹183 | ₹25,852 | ₹0 |
Notice how in Month 1, ₹21,250 of your ₹26,035 EMI goes to interest. By Month 240, only ₹183 is interest. This is why making prepayments early in the loan saves the most money.
Use CalcAdda's free EMI calculator with loan type selection, full amortization schedule, and direct bank apply buttons.
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